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Case Law Details

Case Name : Sanjay Kumar Vs Gannon Dunkerley & Co Ltd (NCLAT Delhi)
Appeal Number : Company Appeal (At) (Insolvency) No.1210 of 2023 30/05/2024
Date of Judgement/Order :
Related Assessment Year :
Courts : NCLAT
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Sanjay Kumar Vs Gannon Dunkerley & Co Ltd (NCLAT Delhi)

In the case of Sanjay Kumar vs Gannon Dunkerley & Co Ltd, the National Company Law Appellate Tribunal (NCLAT) Delhi addressed the issue of whether a pre-existing dispute between the parties can be decided summarily under the Insolvency and Bankruptcy Code (IBC), specifically under Section 9. The appeal stemmed from a dispute initiated when Gannon Dunkerley & Co Ltd (Operational Creditor) filed a petition under Section 9 of the IBC against Sanjay Kumar (Corporate Debtor) after its demand notice was replied to with a notice of dispute.

To understand the context, the tribunal examined the sequence of events leading to the initiation of insolvency proceedings. Gannon Dunkerley was awarded a contract by the National Highway and Infrastructure Development Corporation Ltd (NHIDCL) for a project in Assam but faced challenges in completing it. They subcontracted a significant portion of the work to Kapasi Infracon LLP (Corporate Debtor). Disputes arose regarding payments and other contractual obligations between the Operational Creditor and the Corporate Debtor, including delays, disputes over bills, and the involvement of a third party (Jalan Infrastructure LLP) in financing the project.

Key dates and actions were scrutinized, including the issuance of final bills and subsequent notices under the IBC and arbitration clauses. The NCLAT reviewed the lower court’s decision, which had admitted the Section 9 petition, primarily on grounds that no pre-existing dispute existed between the parties that would preclude admission under the IBC. The lower court had reasoned that the disputes raised were not substantial enough to qualify as pre-existing under the IBC.

In its deliberation, the NCLAT referenced legal precedents, including the Supreme Court’s guidance on what constitutes a pre-existing dispute. The court emphasized that a pre-existing dispute, to be valid, should not be trivial or merely technical but should involve substantial issues that require proper adjudication. The tribunal found that in this case, disputes regarding payments, contractual obligations, and arbitration clauses were substantial and required detailed examination. It was noted that the Corporate Debtor had already initiated arbitration proceedings prior to the Operational Creditor’s petition under Section 9, which further underscored the existence of a pre-existing dispute.

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